Should I float? Should I lock? - Daily Update for Tuesday, January 22, 2008

Here are the daily thoughts on floating or locking if you are asked by your clients. 

As always - consult your favorite mortgage professional who will be able to offer the best advice for YOUR unique situation.

Slow week in planned economic news.  The big news of today is the sell-off of global stocks on fears of a US recession.  With Wall Street and the Dow Jones Industrial Average looking to plunge at the opening bell, bonds have already rallied quite a bit this morning.

Edit - The Fed has cut the Fed Funds Rate by 3/4 point.  While this is good news for those with HELOC's, this means mortgage rates are going to take a turn upwards.

Technically speaking - the FNMA 5.5% 30 year bond has appeared to broken through 2.5 years high making mortgage rates appear to be dropping even further. With bonds still in an overbought state this would make for a good time to

...    lock.

Edit - Just a quick explanation - bonds will improve today, but once the euphoria wears off from this cut, sense will set in to the bond traders.  Profit taking will occur and mortgage rates will worsen.  Today is an excellent time to lock in the better rates that will be coming out.

To learn why one should Float or Lock -

                          Check out Should I float? Should I lock? & Reasons to Float or Lock